EXPLORE

EXPERIMENT 7: It’s (Not) All About the Jacksons

While companies routinely attempt to incentivize employee productivity, they often implement programs without any sort of systematic analysis to determine their effectiveness.

Experiment

To explore the effect of a range of incentives, my colleague at Duke and I worked with Intel to implement a short-term bonus program and measure its impact on worker productivity. We tested three incentive systems: cash, a family meal voucher, and verbal praise.

Results

And while all bonus types increased performance by over 5%, the non-monetary bonuses had a slight advantage over pure cash. Most notably, when productivity was measured in the post-bonus period, we saw a decrease in productivity for monetary bonuses – far below baseline productivity – but not for the verbal reward. There is one hitch, however: this decrease only occurred when cash was offered as a default option but not when it was a matter of choice. The simple addition of choice to the equation counteracted the demotivating effects of monetary incentives.